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It has been revealed that the naira has fallen against the US dollar at the parallel market again. According to a business reports, the naira on Monday further depreciated against the dollar at the parallel market and lost N1.50 to the dollar as it was traded at N225.5 to the dollar at the parallel market on Monday afternoon.The report claimed that this is in sharp contrast to the N224 per dollar recorded last Friday.

The official interbank rate also reportedly dropped by 0.05 to N196.95 to the dollar, while traders at the parallel market attributed the depreciation of the naira at the market to insufficient quantity of dollar at the market.

It would be recalled that the Central Bank of Nigeria (CBN) recently explained that its efforts to save naira’s exchange rate from dive has to completely unexpected catastrophic results for Nigerian businesses. In that report by the CBN, the extreme measures backed by Muhammadu Buhari to keep naira’s exchange rate afloat are killing the existing businesses in Nigeria instead of boosting domestic production as it was expected.

To stop naira’s further devaluation and to encourage local manufacturing the central bank has banned Nigerian companies to buy for dollars a vast variety of foreign goods ranging from glass to oil and tomatoes.

It has however come to light that this policy approved by Muhammadu Buhari as a part of a plan to boost local economy has led to the opposite results. Many local companies found themselves on the verge of shutting their businesses due to inability to supply their productions with much-needed imported raw materials – and they are not able to find the substitutes at home either.  Besides that Nigerian business are not able to buy foreign currency in quantities needed to comply with the contracts.

“Many companies have defaulted on fulfilling foreign obligations, even blue chip companies, for the first time,” Muda Yusuf, director general of the Lagos Chamber of Commerce, told the press adding that many firms lost their credit lines due to inability to get foreign currency in time to fulfil the terms of the contracts.

Some top executives in Nigerian companies confirm that it can take more than 10 days to get dollars from the CBN, and the central bank is not able to satisfy the demand in foreign currency fully and this has led to catastrophic results.

While ruling Nigeria as a military leader in 1980s, Muhammadu Buhari already imposed restrictions on imported goods and that measures led to the same catastrophic results in economy, slowing its development and destroying businesses largely dependent on import. However, proponents of import ban believe that these measures will eventually lead to the development of local businesses. But some prominent economists doubt that strict regulations of imports and restrictions on exchange market will lead to the desired results.

“Nigeria has had substantial experience with similar import-substitution policies in the past,” said Razia Khan, chief economist at Standard Chartered Bank, adding that “rarely have they succeeded in creating a vibrant, competitive industrial sector, with the capability of creating the employment growth that Nigerian demographics otherwise demand.”